{"id":8273,"date":"2013-01-30T05:37:42","date_gmt":"2013-01-30T05:37:42","guid":{"rendered":"http:\/\/vskills.in\/certification\/tutorial\/?p=8273"},"modified":"2024-04-12T14:14:13","modified_gmt":"2024-04-12T08:44:13","slug":"residential-vs-commercial","status":"publish","type":"page","link":"https:\/\/www.vskills.in\/certification\/tutorial\/residential-vs-commercial\/","title":{"rendered":"Residential vs. Commercial"},"content":{"rendered":"\n<p><a href=\"https:\/\/www.vskills.in\/certification\/tutorial\/certified-real-estate-consultant\/\" target=\"_blank\" rel=\"noreferrer noopener\">Go back to Tutorial<\/a><\/p>\n\n\n<p><a class=\"vsc\" href=\"http:\/\/www.vskills.in\/certification\/Certified-Real-Estate-Consultant\"><span class=\"vsc-cn\" style=\"text-align: center;\"><span style=\"color: red;\">Certify and Increase Opportunity.<\/span><br>\n<span style=\"color: green;\">Be <\/span><br>\nGovt. Certified Real Estate Consultant<br>\n<\/span><\/a><\/p>\n<p>Below are some of the advantages of Residential and commercial properties.<\/p>\n<p><b>Advantages of residential property<\/b><\/p>\n<ul>\n<li><span style=\"font-size: 1rem; line-height: 1.714285714;\">Ongoing property shortage \u2013 residential property is currently under supplied and this is a key reason why residential will continue to enjoy capital growth in the medium term.<\/span><\/li>\n<li><span style=\"font-size: 1rem; line-height: 1.714285714;\">Larger choice of investments with more residential properties available for purchase.<\/span><\/li>\n<li><span style=\"font-size: 1rem; line-height: 1.714285714;\">High access to credit and leverage \u2013 banks will lend at a higher Loan to Valuation Ratio (LVR) and at lower interest rates with residential property. Many lenders are lending 95 per cent again.<\/span><\/li>\n<li><span style=\"font-size: 1rem; line-height: 1.714285714;\">Large amount of historical performance data \u2013 residential property prices have been monitored for over a hundred years, providing greater investment certainty<\/span><\/li>\n<li><span style=\"font-size: 1rem; line-height: 1.714285714;\">Large amount of ongoing analysis \u2013 there are many data sources that can track and make forecasts on your residential investment, such as Australian Property Monitors or RP Data.<\/span><\/li>\n<li><span style=\"font-size: 1rem; line-height: 1.714285714;\">Increasing rents\/yields \u2013 strong demand for property and rising population ensures rising yields.<\/span><\/li>\n<li><span style=\"font-size: 1rem; line-height: 1.714285714;\">Low vacancy rates \u2013 provides higher confidence of receiving the forecasted rent\/yield.<\/span><\/li>\n<li><span style=\"font-size: 1rem; line-height: 1.714285714;\">Good capital gains \u2013 residential property has enjoyed stronger historical capital gains.<\/span><\/li>\n<li><span style=\"font-size: 1rem; line-height: 1.714285714;\">Self-managed super funds \u2013 you can now buy a residential property with leverage in a SMSF.<\/span><\/li>\n<li><span style=\"font-size: 1rem; line-height: 1.714285714;\">Offshore demand \u2013 there is an increasing demand from Asian investors for Australian property.<\/span><\/li>\n<li><span style=\"line-height: 1.714285714; font-size: 1rem;\">Rising investor demand \u2013 the current high demand is contributing to capital growth.<\/span><\/li>\n<li><span style=\"line-height: 1.714285714; font-size: 1rem;\">It\u2019s a lot simpler \u2013 landlords can rely on a property manager to find someone who wants to live in the dwelling. The demand from tenants is strong so if one tenant is unable to pay their rent, a new tenant can be sourced quickly with minimal involvement from the landlord.<\/span><\/li>\n<\/ul>\n<p><b>Disadvantages of residential property<\/b><\/p>\n<ul>\n<li><span style=\"line-height: 1.714285714; font-size: 1rem;\">Lower yield \u2013 lower annual returns with average yields approximately three to five percent.<\/span><span style=\"line-height: 1.714285714; font-size: 1rem;\">&nbsp;<\/span><\/li>\n<li><span style=\"line-height: 1.714285714; font-size: 1rem;\">Rising interest rates \u2013 deterioration of the return on investment and possibly even losses.<\/span><\/li>\n<li><span style=\"font-size: 1rem; line-height: 1.714285714;\">Mortgage overhang \u2013 as interest rates rise, mortgage defaults may result in an increase to supply which will affect the value of surrounding properties.<\/span><\/li>\n<\/ul>\n<p><strong><span style=\"line-height: 1.714285714; font-size: 1rem;\">Advantages of commercial property<\/span><\/strong><\/p>\n<ul>\n<li><span style=\"font-size: 1rem; line-height: 1.714285714;\">Higher yields \u2013 higher annual returns than residential property with average yields ranging from five to 10 per cent depending on the type of tenant and the terms of the tenancy.<\/span><\/li>\n<li><span style=\"font-size: 1rem; line-height: 1.714285714;\">Business owner benefits \u2013 Business owners can take advantage of buying the premises they need to occupy. Some great tax advantages can be found doing this.<\/span><\/li>\n<li><span style=\"font-size: 1rem; line-height: 1.714285714;\">High access to credit and leverage \u2013 banks are comfortable to lend but at a reduced level compared to residential \u2013 usually 80 per cent compared to 95 per cent LVR with residential.<\/span><\/li>\n<\/ul>\n<p><b style=\"line-height: 1.714285714; font-size: 1rem;\">Disadvantages of commercial property<\/b><\/p>\n<ul>\n<li><span style=\"line-height: 1.714285714; font-size: 1rem;\">High level of expertise required \u2013 you must understand credit assessment to analyse the likelihood of a tenant being able to pay the rent. This includes reading tax returns and business plans.<\/span><\/li>\n<li><span style=\"font-size: 1rem; line-height: 1.714285714;\">Value of property depends on tenant \u2013 the credit assessment is directly linked to the valuation of the property, so you must get this right or risk losses.<\/span><\/li>\n<li><span style=\"font-size: 1rem; line-height: 1.714285714;\">A large number of start-up businesses fail. Additionally, a business may have done well in one location but that doesn&#8217;t mean it will do well in another.<\/span><\/li>\n<li><span style=\"line-height: 1.714285714; font-size: 1rem;\">Smaller choice of investments with fewer desirable commercial properties available to buy.<\/span><\/li>\n<li><span style=\"font-size: 1rem; line-height: 1.714285714;\">Low capital gains \u2013 on average, commercial property has not enjoyed the same historical capital gains as residential.<\/span><\/li>\n<li><span style=\"font-size: 1rem; line-height: 1.714285714;\">Higher vacancy rates than residential property.<\/span><\/li>\n<\/ul>\n<div class=\"apply\">\n<h3>Apply for Real Estate Certification Now!!<\/h3>\n<p><a href=\"http:\/\/www.vskills.in\/certification\/Certified-Real-Estate-Consultant\">http:\/\/www.vskills.in\/certification\/Certified-Real-Estate-Consultant<\/a><\/p>\n<\/div>\n\n\n<p><a href=\"https:\/\/www.vskills.in\/certification\/tutorial\/certified-real-estate-consultant\/\" target=\"_blank\" rel=\"noreferrer noopener\">Go back to Tutorial<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Go back to Tutorial Certify and Increase Opportunity. Be Govt. Certified Real Estate Consultant Below are some of the advantages of Residential and commercial properties. Advantages of residential property Ongoing property shortage \u2013 residential property is currently under supplied and this is a key reason why residential will continue to enjoy capital growth in the&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"categories":[19],"tags":[6723,6754,3091,3093],"class_list":["post-8273","page","type-page","status-publish","hentry","category-real-estate","tag-real-estate","tag-real-estate-consultant","tag-real-estate-consultant-certification","tag-residential-vs-commercial"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Residential vs. Commercial - Tutorial<\/title>\n<meta name=\"description\" content=\"Residential vs. Commercial\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.vskills.in\/certification\/tutorial\/residential-vs-commercial\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Residential vs. Commercial - 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